REG-Travis Perkins Travis Perkins: Third quarter 2018 trading update - 'Solid trading performance in line with market expectations'

Travis PerkinsAnnouncement

23/10/2018 07:05

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   Travis Perkins (TPK)
   Travis Perkins: Third quarter 2018 trading update - 'Solid trading
   performance in line with market expectations'

   23-Oct-2018 / 08:00 CET/CEST
   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   23 October 2018

   Travis Perkins plc

   Third quarter 2018 trading update - "Solid trading performance in line
   with market expectations"

   Highlights

     • Q3 Group total sales growth of 3.9% and like-for-like sales growth of
       4.1%
     • Combined Merchant businesses (including the General Merchanting,
       Contracts and  Plumbing & Heating divisions) achieved like-for-like
       growth of 7.0%
     • Challenging UK DIY market environment continues for the Wickes
       business, although pricing pressure has begun to moderate
     • Good progress on cost reduction activities, anticipate full-year
       performance in line with market expectations

   John Carter, Chief Executive, commented:

   "The Group  delivered  a  solid  Q3  trading  performance,  in  line  with
   expectations. Our  trade-focused businesses  delivered good  sales  growth
   against a challenging  market backdrop, including  successful recovery  of
   cost price inflation. The UK DIY  market continues to be very  challenging
   for Wickes, where significant price pressure and weak consumer  confidence
   is providing a tough trading backdrop.

   Across the Group,  we are  making good  progress with  the cost  reduction
   activities that were highlighted in July, and these actions are generating
   positive  results  and   underpin  our  confidence   that  our   full-year
   performance is on track and in line with market expectations(1)."

   Q3 2018 sales       General     Plumbing & Contracts(2) Consumer(3) Group
   growth           Merchanting(2) Heating(2)
   Like-for-like         1.3%        14.8%        8.9%       (4.2)%     4.1%
   sales
   Net new space        (0.4)%       (4.4)%       0.3%        2.4%     (0.2)%
   and acquisitions
   Total sales           0.9%        10.4%        9.2%       (1.8)%     3.9%
   Two-year              3.7%        21.0%       17.3%       (1.9)%     8.4%
   like-for-like

    

    

   YTD 2018 sales       General     Plumbing & Contracts(2) Consumer(3) Group
   growth            Merchanting(2) Heating(2)
   Like-for-like          0.9%        18.2%        6.4%       (4.2)%    4.2%
   sales
   Net new space and      0.1%        (4.5)%       0.9%        2.3%     0.1%
   acquisitions
   Total sales            1.0%        13.7%        7.3%       (1.9)%    4.3%

    

   Total Group sales grew  by 3.9% in the  third quarter, with  like-for-like
   sales growth of 4.1%, in line with the first half of the year. Sales price
   inflation reduced modestly in Q3 to  1.9% and was primarily driven by  the
   successful pass through of commodity-price inflation in the  trade-focused
   businesses, partially offset by  Wickes, which as previously  highlighted,
   experienced significant  pricing  pressure  in  the  UK  DIY  market.  The
   combined Merchanting businesses (General  Merchanting, Plumbing &  Heating
   and Contracts) achieved like-for-like growth of 7.0% (7.1% YTD).

   The like-for-like  growth rate  in General  Merchanting softened  modestly
   compared to  the second  quarter of  2018 as  the business  cycles  strong
   comparative growth rates from Q3  2017. The two-year like-for-like  growth
   rate increased  to 3.7%  (Q2 2018:  3.3%). Cost  reduction initiatives  to
   streamline above-branch  costs were  completed as  planned by  the end  of
   September, with actions to reduce waste and improve efficiency within  the
   business continuing throughout the remainder of the year.

   The Plumbing  &  Heating division  maintained  its positive  sales  growth
   momentum from the first half of 2018, continuing its outperformance of the
   market. Sales  growth  was  strong  across  the  division,  including  the
   wholesale  business,  branch  network  and  specialist  online   channels,
   primarily driven by  enhancements to  customer propositions.  The rate  of
   growth is expected to moderate through  Q4 as the division annualises  the
   strong performance improvement achieved in Q4 2017.

   In the Contracts division, all  three businesses continued to  demonstrate
   good  growth  and   are  outperforming  their   markets.  The  impact   of
   commodity-price inflation moderated in Q3,  with sales price inflation  of
   3.8%, down from 6.0% in the first half of 2018.

   Toolstation continued  its strong  like-for-like and  total sales  growth,
   underpinned by  successful  range  extensions helping  to  increase  sales
   density, and the continued  expansion of the store  network. We remain  on
   track to open 40 stores in 2018.

   The market  environment  in  UK  DIY  remains  challenging,  resulting  in
   continued volume  declines  in Wickes  in  both  core DIY  and  Kitchen  &
   Bathroom showroom categories. Significant  pricing competition across  the
   sector has prevented the recovery of cost price inflation, albeit  pricing
   pressure has begun to moderate in recent weeks, and K&B order activity has
   shown  some  early  signs  of  recovery.  Cost  reduction  activities  are
   progressing as planned, with reduced distribution costs and tight  control
   of overhead costs.

   Lead indicators such as secondary  housing transactions, house prices  and
   consumer confidence continue  to paint a  mixed picture, and  as such  the
   Group remains cautious on the near-term  market outlook. In light of  this
   the Group continues to focus on  managing its underlying cost base,  which
   underpins the Group's confidence that  full-year performance is on  track,
   and in line with market expectations(1).

    

   Enquiries

   Investor / analyst enquiries

   Graeme Barnes | +44 7469 401819 |  1 graeme.barnes@travisperkins.co.uk

   Zak Newmark | +44 7384 432560 |  2 zak.newmark@travisperkins.co.uk

    

   Media enquiries

   David Allchurch / Toby Bates | Tulchan Communications | +44 207 353 4200

    

   The Travis Perkins Management Team will  be hosting a Capital Markets  Day
   on 04 December 2018.

    

   Footnotes

    1. Company compiled market consensus  for FY 2018 Group  EBITA, as of  22
       October 2018, of £363m (range of £356m to £368m).
    2. Like-for-like sales  growth  for  the  three  month  period  ended  30
       September 2018 compared to the  three month period ended 30  September
       2017. Total sales growth for the three month period ended 30 September
       2018 compared to the three month period ended 30 September 2017.
    3. Wickes like-for-like growth for the 13 week period ended 29  September
       2018 compared to the  13 week period ended  30 September 2017.  Wickes
       total sales  growth for  the 91  day period  ended 29  September  2018
       compared to the 91 day period ended 30 September 2017.

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   ISIN:           GB0007739609
   Category Code:  QRT
   TIDM:           TPK
   LEI Code:       2138001I27OUBAF22K83
   OAM Categories: 3.1. Additional regulated information required to be
                   disclosed under the laws of a Member State
   Sequence No.:   6287
   EQS News ID:    736339


    
   End of Announcement EQS News Service

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References

   Visible links
   1. mailto:graeme.barnes@travisperkins.co.uk
   2. mailto:zak.newmark@travisperkins.co.uk


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